Alcoa earnings don't impress

Updated: 7:40 p.m. ET

Shares of Alcoa (AA) were off nearly 1.6% after hours despite beating Wall Street estimates on earnings and predicting better profits this year.

The report, which traditionally kicks off earnings season, came after stocks slipped again modestly today. The Dow Jones industrials ($INDU) and the Standard & Poor's 500 Index ($INX) suffered their third straight losses. The Nasdaq Composite Index ($COMPX) enjoyed a small gain.

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Alcoa saw earnings after one-time items rise to 21 cents a share on revenue of $5.65 billion. Earnings beat the Street estimate of 19 cents a share and were up from a penny a share last year. Revenue was a touch under the Street estimate of $5.75 billion and was the culprit for the share decline after hours.

Shares were off 1.8% to $16.20 after rising 0.4% to $16.49 in regular trading.

Alcoa said the economic recovery had boosted aluminum, and the company said it expected demand would stay strong.

Prices for aluminum, which is used in a broad array of products, have jumped significantly since July, boosting sales levels for aluminum makers including Alcoa. Analysts expect new housing starts and car sales will continue to climb this year, trends that will support the aluminum market, although there are some concerns about rising energy costs

Before the Alcoa report, the Dow had closed down 37 points to 11,637. The S&P 500 was off 2 points to 1,270, and the Nasdaq ended with a 5-point gain to 2,708.

It's not clear how the market will open on Tuesday, given the reaction to Alcoa. Futures trading suggests a flat open.

One reason: Advanced Micro Devices (AMD), up 4.1% in regular trading, gave it all back after hours after CEO Dirk Meyer resigned his post. At 7:12 p.m. ET, AMD was down 3.8% to $8.84 after rising to $9.19 in regular trading.

The CEO change came, as The Wall Street Journal noted, just as a turnaround in the company's fortunes appeared to be emerging. The board said it want to accelerate its growth rate.

Chip maker Nvidia (NVDA) shares soared after hours, rising 4.2% to $21.50 after hours . The company and Intel (INTC) had settled a patent dispute. Intel will pay $1.5 billion in licensing fees to Nvdia over the next five years. In regular trading, Nvidia had closed up 3.8% to $20.63.

Intel was up slightly to $20.71 after hours. The shares had finished up 0.2% to $20.69 in regular trading. The company reports fourth-quarter results after Thursday's close.

European debt woes rise to the surface again
The market was pressured from the beginning as worries mounted yet again about the debt problems of Portugal and Spain, and Italy as well. The fears were enough to offset any excitement generated by a number of big deals in the United States, including a merger that could create the nation's largest electric utility.

For those worried the market is about to tip over into the abyss, consider: The S&P 500 approached 1,260, bottoming at 1,262 just before 10 a.m. ET, then moved higher. Since just before Christmas, 1,260 has become as a strong support level, setting off new buying whenever it's approached.

Energy prices -- New York close
			Mon.			Fri.			Month chg.			YTD chg.
Crude oil			$89.25			$88.03			-2.33%			-2.33%
(per barrel)
Heating oil			$2.5561			$2.4863			0.49%			0.49%
(per gallon)
Natural gas			$4.3990			$4.4220			-0.14%			-0.14%
(per mil. BTU)
Unleaded gasoline			$2.4543			$2.4131			0.04%			0.04%
(per gallon)
Retail gasoline			$3.0880			$3.0880			0.52%			0.52%
(per gallon; AAA)

Crude oil, gold move slightly higher
Crude oil was up $1.16 after rising to as high as $89.98 after a spill shut most of the oil shipped from Prudhoe Bay on Alaska's North Slope. The pipeline transports about 15% of U.S. oil production. BP (BP) was forced to halt production of 95% of its capacity.

Gold, meanwhile, settled up $5.20 to $1,374.10 an ounce. 

The 10-year Treasury yield was at 3.304%, down from 3.328% on Friday.

The market started to move higher after the euro began to rebound against the dollar. The euro had slumped earlier in the day after Europe’s debt troubles came back into play on renewed bailout talk involving Portugal. Also: Portugal, Spain and Italy were preparing to borrow at least $43 billion this week.

Germany's Dax Index ($DE:DAX) was off 91 points, or 1.3%, to 6,857, and Britain's FTSE-100 Index ($GB:UKX) was down 28 points, or 0.5%, to 5,956. 

Deals large, deals small and deals maybe
Meanwhile, investors seemed cool to Duke Energy's (DUK) agreement to merge with Progress Energy (PGN) in a $13.7 billion stock swap. The deal would create the nation's largest electric utility. Duke was down 1.2% to $17.58. Progress was off 1.6% to $43.99. The stock had risen 3% between Wednesday and Friday.

Under terms of the deal, Progress shareholders would receive 2.6125 shares of Duke for each of their shares, the companies said. That values Progress at $46.48 a share, 3.9% more than its Jan. 7 closing price.

Separately, DuPont agreed to buy Danish chemical company Danisco (DNSCY) for $5.8 billion. DuPont (DD) was off 2.8% to $48.40. Danisco's American Depositary Units were up 22.8% to $14.19.

This was more proof that big deals are back in fashion. Bloomberg News noted that there were fewer than 20 deals done in 2010 valued at $10 billion or more, compared with 40 in 2007 just as the stock market was peaking.

Separately, shares of Playboy Enterprises (PLA) were up 17.1% to $6.09 after founder Hugh Hefner agreed to take the company private for $6.15 a share, or $207 million. The shares hit a 52-week high of $6.10 today and have doubled in the last year. The shares are still off 82% from their all-time high of $33.44 in March 1999.

U.S. shares of Smith & Nephew (SNN), a Britsh maker of hip and knee replacements, were up 6.8% to $54.28. Sky News reported the company had rejected a 7-billion-pound ($10.9 billion) takeover approach from Johnson & Johnson (JNJ) several weeks before Christmas. Johnson & Johnson was off 0.7% to $62.16.

The tone improves by day's end
Gainers were ahead of decliners 1.05-to-1 on the New York Stocks Exchange and 1.2-to-1 on the Nasdaq system.

Yet, only 11 of the 30 Dow stocks were higher, led by 3M (MMM), up 1.1% to $87.15. The laggard was AT&T (T), off 1.8% to $28.34. The company's monopoly on selling Apple's (AAPL) iPhone is about to end.

Verizon Communications (VZ) is expected to announce Tuesday that it will start marketing its version of the iPhone. Verizon was off slightly to $35.92.

Meanwhile, 55 Nasdaq-100 ($NDX.X) stocks were higher. The index, which tracks the largest Nasdaq stocks, was up 8 points to 2,284.

Netflix (NFLX) was the biggest gainer in the index, up 4.8 to $187.88. Apple, up 1.9% to $342.45, added nearly 8 points to the Nasdaq-100 by itself.

Microsoft (MSFT), down 1.3% to $28.22, subtracted 1.3 points from the index. Shares fell fell after the company announced that Bob Muglia, president of the software giant's server and tools business, will leave the company this summer after CEO Steve Ballmer decided a change was needed at the unit. (Microsoft is the publisher of MSN Money.)  

Short hits from the markets -- New York close
			Mon.			Fri.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.140%			0.140%			16.67%			16.67%
5-year Treasury note			1.928%			1.956%			-4.37%			-4.37%
10-year Treasury note			3.304%			3.328%			-0.03%			-0.03%
30-year Treasury bond			4.488%			4.490%			2.89%			2.89%
Currencies
U.S. Dollar Index			81.163			81.321			2.36%			2.36%
British pound			$1.5581			$1.5579			-0.16%			-0.16%
(in U.S. $)
U.S. $ in pounds			£0.642			£0.642			0.16%			0.16%
Euro in dollars			$1.295			$1.295			-3.19%			-3.19%
(in U.S. $)
U.S. $ in euros			€ 0.772			€ 0.772			3.29%			3.29%
U.S. $ in yen			82.850			82.670			1.82%			1.82%
U.S. $ in Chinese			6.660			6.633			0.68%			0.68%
yuan
Canada dollar			$1.007			$1.007			0.37%			0.37%
(in U.S. $)
U.S. dollar			$0.994			$0.993			-0.37%			-0.37%
(in Canadian $)
Commodities
Gold			$1,374.10			$1,368.90			-3.33%			-3.33%
(per troy ounce)
Copper			$4.26			$4.28			-4.10%			-4.10%
(per pound)
Silver			$28.86			$28.67			-6.71%			-6.71%
(per troy ounce)
Wheat			$7.6725			$7.7400			-3.40%			-3.40%
(per bushel)
Corn			$6.0700			$5.9500			-2.49%			-2.49%
(per bushel)
Crude oil			$89.25			$88.03			-2.33%			-2.33%
(per barrel)